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Title: The Quest for Value by G. Bennett Stewart ISBN: 0-88730-418-4 Publisher: HarperBusiness Pub. Date: 12 February, 1991 Format: Hardcover Volumes: 1 List Price(USD): $50.00 |
Average Customer Rating: 4.17 (18 reviews)
Rating: 4
Summary: Interesting, well-written and useful but.....
Comment: Stewart has crafted an engaging treatment of Economic Value Added (EVA) which is accessible to both financial professionals and "lay-investors" alike. The material is highly readable and the case examples serve well to illustrate important concepts. (One criticism: Stewart should receive 40 lashes with a wet noodle for failing to provide an index in an 800 page quasi-academic book).
EVA was Stewart's contribution (in 1991) to the Shareholder Value framework originally introduced by Alfred Rappaport of Northwestern University. This theoretical framework emphasizes the imperative of adding shareholder value via the undertaking of specific financial and investment decisions at the corporate level and measuring that value with a metric similar to discounted cash flow analysis. EVA is Stern-Stewart's metric.
After reading the Motley Fools rave review above, I would issue one caveat to all of those "fools" who think they have found the holy grail to selecting winning stocks: EVA has been around for a long time (the theoretical work precedes THE QUEST FOR VALUE by decades) and is well-integrated into investment management methodologies. There have been several studies which demonstrate that selecting stocks based on EVA or even changes in EVA will not produce excessive returns for investors (See Damodaran). Thus, the real "value" of THE QUEST FOR VALUE for private investors is to focus attention on the importance of economic measures of value and to point out the limitations of accounting valuation measures like earnings and earnings growth.
Rating: 3
Summary: Relatively little new or noteworthy
Comment: Many of the concepts in this book have been described and used by successful investors such as Graham in the 30s, Buffett's adaptation of Graham's ideas in the 70s and 80s, and the more recent breed of Intrinsic Value-driven investors who garner wide respect today. New terms are introduced with great fanfare when they often are simple rearrangements of well-known formulas (taking the inverse of a ratio somehow gives you a radically new insight?). It seemed to me that the major contribution of the author is a new set of acronyms.
Claims about how failing companies turned around into successes because they adopted EVA are not sufficiently supported. Those turnarounds could have happened for any of many other reasons. The claims would be believable if they were well supported with facts and deeper analysis. As they are, they detract from the overall quality of the book and raise questions about other claims made in it. At times the author's tone is condescending, as if we can all assume his statements don't need proof!!
The book could function as a fair reference but as most other reviewers have noted, there is no index, and the table of contents is about half a page! This is particularly difficult because the discussions of important concepts are somewhat spread about in the book.
On the positive side, the author's focus on return on capital is good and the reasoning well stated and easy to understand. By the same token, his discussions of what provides true value to the investor (and business manager) is good. But these are not very original. Either the book should have been about one-fourth as long, or the examples the author used to justify EVA should have been much more thoroughly developed.
Rating: 5
Summary: A Valuable Investment
Comment: In not possessing a Finance or Accounting background, I have found it extrememly difficult to find a book that can guide me from the very basics of corporate valuation through to the complexities inevitable in any such subject.
However I would urge any potential customer (either financially astute or a beginner like myself) who is genuinely interested in Value, to look no further than "The Quest for Value".
The key resides in the style (fully informative yet at times conversational / humuorous), the content (rich in depth and explanation) and finally the extensive case studies and "war stories" that bring Valuation fully to life.
You dont have to be an accountant or corporate finance practioner to understand and apply the fundamental principles of EVA - in fact as the author sometimes alludes to, not possessing this background is perhaps a distinct advantage.
Investing in this Quest with Stern Stewart as my guide has helped me enormously.
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Title: The EVA Challenge: Implementing Value Added Change in an Organization by Joel M. Stern, John S. Shiely, Irwin Ross ISBN: 0471405558 Publisher: John Wiley & Sons Pub. Date: 02 February, 2001 List Price(USD): $29.95 |
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Title: EVA and Value-Based Management: A Practical Guide to Implementation by S. David Young, Stephen F. O'Byrne ISBN: 0071364390 Publisher: McGraw-Hill Trade Pub. Date: 22 November, 2000 List Price(USD): $45.00 |
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Title: Valuation: Measuring and Managing the Value of Companies, 3rd Edition by McKinsey & Company Inc., Tom Copeland, Tim Koller, Jack Murrin ISBN: 0471361909 Publisher: John Wiley & Sons Pub. Date: 28 July, 2000 List Price(USD): $80.00 |
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Title: EVA: The Real Key to Creating Wealth by Al Ehrbar ISBN: 0471298603 Publisher: John Wiley & Sons Pub. Date: 09 October, 1998 List Price(USD): $34.95 |
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Title: Foundations of Economic Value Added, 2nd Edition by James L. Grant ISBN: 0471234834 Publisher: John Wiley & Sons Pub. Date: 10 September, 2002 List Price(USD): $69.95 |
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